show i. on the graph and explain. sd1 is long run domestic supply curvesd2 dometic supply curvePw1 observed world pricePw2 includes vulnerability premium Pw3 adds in the per unit climate change damages i. Ignoring externalities and national security risk, the abundance of low-pricedinternational oil keeps a country from switching to renewables even after depleting thedomestic supply of oil (either completely or to a point where MC is too large). You'llneed to show the MC of a renewable that the country would otherwise switch to if notfor cheap international oil (easiest to use constant MC). $/UnitDomestic DemandS d2d1w3Pw2P,w1QuantityА ВFigure 7.2 The National Security Problem

As mentioned in the provided question, only the required labels in the graph are explained. The…

show i. on the graph and explain. sd1 is long run domestic supply curve sd2 dometic supply curve Pw1 observed world price Pw2 includes vulnerability premium Pw3 adds in the per unit climate change damages

show i. on the graph and explain. sd1 is long run domestic supply curve sd2 dometic supply curve Pw1 observed world price Pw2 includes vulnerability premium Pw3 adds in the per unit climate change damages

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

show i. on the graph and explain.

sd1 is long run domestic supply curve

sd2 dometic supply curve

Pw1 observed world price

Pw2 includes vulnerability premium

Pw3 adds in the per unit climate change damages

i. Ignoring externalities and national security risk, the abundance of low-priced
international oil keeps a country from switching to renewables even after depleting the
domestic supply of oil (either completely or to a point where MC is too large). You'll
need to show the MC of a renewable that the country would otherwise switch to if not
for cheap international oil (easiest to use constant MC).

$/Unit
Domestic Demand
S d2
d1
w3
Pw2
P,
w1
Quantity
А В
Figure 7.2 The National Security Problem

Defintion Defintion Curve that represents the graphical relationship between the total supply of goods and services and the price level in the economy. When the price level increases, producers tend to supply more of a product in the market to earn a higher revenue or vice versa.

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Step 3: Explain the label on the graph 'Sd2'

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Step 4: Explain the label on the graph 'Pw1'

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Step 5: Explain the label on the graph 'Pw2'

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show ii. on the graph and explain. sd1 is long run domestic supply curve sd2 dometic supply curve Pw1 observed world price Pw2 includes vulnerability premium Pw3 adds in the per unit climate change damages